Tuesday, 30 December 2014

GEORGE TOWN: Penang-born Prof Dr Michael Khoo Boon Chong has made the state proud as the youngest professor in Universiti Sains Malaysia (USM).

Prof Khoo, 39, who obtained his associate professor title in 2007, became a professor in the School of Mathematical Sciences four years ago when he was just 35.

He specialised in Statistical Quan­tity Control.

Prof Khoo, who hails from Bayan Lepas, said he chose to complete all his studies where he was born.

“I got my education, including my PhD in Penang. I went to La Salle School in Batu Lanchang (the school was closed down) from Year One to Year Three and then to St Xavier Primary School in Farquhar Street during Standard Four and continued my studies in St Xavier’s Insitution until I finished Form Six.

“I got my degree in Applied Sciences with first-class honours and my doctorate in Statistics from USM in 1999 and 2001 respectively.

“I joined USM School of Mathe­matical Sciences from 2001 as a lecturer,” he said after his inaugural public lecture after his appointment as a professor.

Citing the reasons for studying in Penang instead of overseas, he said as the only child, he wanted to be with his parents.

“I am not from a rich family. My 65-year-old father, Khoo Kah Peng, was a clerk with the city council and my mother Hoo Kim Bee, 67, is a housewife.

“My main priority during that time was that I wanted to stay close with my parents,” he said.

Prof Khoo said he followed his supervisor’s path to specialise in Statistical Quantity Control.

“I love to do research on Statistical Quantity Control, which is useful for industries to maximise profits and reduce costs,” he said.

He said he was thankful to USM as his hard work and research efforts were appreciated.

Prof Khoo is actively involved in publishing manuscripts and work papers.

He has published almost 100 manuscripts in international journals and presented more than 50 papers at national and international conferences.

Monday, 29 December 2014

AirAsia flight QZ8501 lost contact with air traffic control at 7.24am yesterday. There were 162 people on board - 155 passengers, and 7 crew members. The plane was last seen between the Indonesian island of Belitung, and Pontianak in Borneo. There was bad weather over Belitung at the time.

Key points:

- An AirAsia flight QZ8501 from the Indonesian city of Surabaya to Singapore lost contact with air traffic control on Sunday at around 6:17 am local time.

- AirAsia has established an emergency call center. The number is +622129850801.

- Plane requested to deviation due to bad weather before contact was lost

- Plane is carrying 162 people - 155 Indonesian, three South Koreans, one French, one Malaysian, one Briton and one Singaporean.

Briton Choi Chi Man and his two-year-old daughter feared missing on the Air Asia plane was only on board because there was no room on an earlier flight, friends said. His wife and son flew on earlier flight.

Mr Choi, who is originally from Hull, Yorkshire, lives in Singapore but works in Indonesia where he is a unit managing director for electronic manufacturing firm Alstom Power.

An engineering graduate of Essex University, his parents still live in Hull, after emigrating from Hong Kong, and he is understood to have a brother and sister in the UK. - the Daily Telegraph

AirAsia,has been operating in Indonesia for 10 years, is 49% owned by Malaysia-listed AirAsia Bhd. The remaining stake is held by an Indonesia company that has 3 individuals as shareholders: Pin Harris with 20%, Senjaya Wijaya with 21% and a privately held entity PT Fersindo Nusaperkasa with 10%

The private company is believed to be linked to Riza Chalid, a tycoon said to have close links to Probowo Subbianto, who put up a strong challenge against Joko Widodo for the presidency post recently.

The incident caps a disastrous year for Malaysia-affiliated airlines.

Malaysian Airlines Flight MH370 went missing on March 8 on a trip from Kuala Lumpur to Beijing with 239 passengers and crew on board and has not been found.

On July 17, the same airline's Flight MH17 was shot down over Ukraine, killing all 298 people on board.

Hours after the disappearance of QZ8501 aviation experts have begun comparing the incident with still-missing Malaysian Airlines MH370.

Like
MH370, the AirAsia flight disappeared from radars and made no further
communication with Air Traffic Control - not even an emergency “squawk”.

Yesterday aviation expert Peter Stuart Smith said it was strange
that QZ8501 had made no further contact was made with Air traffic
control.

“Even if we assume that the aircraft did encounter such
incredibly adverse weather conditions that it broke up in midair or the
conditions led to the pilots losing control, there are still a number of
questions that need answering,” said Mr Smith.

“Obviously the
first priority for the pilots is to fly the aircraft but relaying a
message to Air Traffic Control (ATC) about what’s happening only
involves depressing a single button on the control column and simply
speaking.

“It would also only take a few seconds to squawk 7700
(emergency) on the SSR box which would alert ATC to there being a
problem -although not what the problem was.”

A passenger who boarded missing Flight QZ8501 joked "goodbye forever"
to a pal hours before the plane vanished en route from Indonesia to
Singapore.

The distraught friend, a man in his 20s, told
Indonesia's TV One on Sunday: "This morning, before I went to pray, one
of them called me and jokingly said: 'See you in the new year and
goodbye forever'.

"That's all and then the bad news came."

The man said he had planned to go on the trip but cancelled it two weeks ago because he was busy.
"I have two friends who were with five family members," he said tearfully.

"Yes, I planned to spend (New Year's Day) in Singapore actually.

"I hope for a miracle and may God save them all.

"I should have gone with them but I cancelled it two weeks ago as I had something to do."

In June 2014, the North Korean government threatened "merciless" action against the United States if the film's distributor, Columbia Pictures,
went ahead with the release. Columbia delayed the release from October
10 to December 25, and reportedly edited the film to make it more
acceptable to North Korea. In November, the computer systems of parent
company Sony Pictures Entertainment were hacked by the "Guardians of Peace", a group the FBI
believes has ties to North Korea. After leaking several other
then-upcoming Sony films and other sensitive internal information, the
group demanded that Sony pull The Interview, which it referred to as "the movie of terrorism". On December 16, 2014, the Guardians of Peace threatened terrorist attacks against cinemas that played The Interview.

On December 17, after a number of major North American cinema chains
canceled screenings in the interest of safety, Sony canceled the
theatrical release of The Interview, drawing criticism from the media, Hollywood figures and U.S. President Barack Obama. After initially stating that it had no plans to release the film, Sony made The Interview available for online rental on December 24, and in a limited release at selected cinemas on December 25. - Wikipedia

Cyber war looms as US-NK tension spikes

North Korea's Internet and 3G networks were back to normal by midday Tuesday after hours of a strange shutdown. This blackout led to speculation that North Korea had been under cyber-attack from the US. It remains unknown whether the purported US-North Korea conflict will flare up into full-blown cyber war.

Sony Pictures, which has caught global attention for filming The Interview, a movie featuring the fictional assassination of North Korean leader Kim Jong-un, was attacked by a group of hackers recently. The FBI asserted that these hackers were sponsored by North Korea, and US President Barack Obama declared the US would make a "proportional response." Thus, there are high suspicions that Washington is behind the attack.

Neither Washington nor Pyongyang has commented officially on the incident. There are more threats to cyber security than ever before, and hacking groups not backed by governments have become mainstream. Countries like the US have established cyber armies, but there has been no declaration of a cyber war so far. Any party suspected of launching cyber invasions using its regular cyber army always denies its involvement.

We hope that Washington and Pyongyang will not engage in war in cyberspace. Once they cross the Rubicon, there is no way back.

The current suspected tit-for-tat situation between North Korea and the US raises the risks of a cyber war. Pyongyang has shown its abomination toward Sony Pictures. However, having denied any connections with the attacks, it hailed these actions as justified.

Washington has revealed its inclination to retaliate against Pyongyang, which is why many assume the Internet blackout in North Korea was its doing. Washington's response could be an overreaction, as it is implying that cyber attacks can be seen as a kind of legitimate state action, which will set a precedent for cyber wars.

Antagonism between North Korea and the US will remain a hot topic for quite a while in the international community. If more cyber attacks are launched in the near future, many people will believe that a cyber war between them has already broken out.
It is possible that Washington is trying to teach Pyongyang a lesson and show its strength through cyber attacks. But it must keep in mind that its advanced networks also have loopholes, which might be taken advantage of by a single hacker and a computer.

The US must not set an example by engaging in cyber warfare. It might prevail in the short term, but the already vulnerable Internet order will be mired in countless trouble.

This North Korea-US cyber conflict has also reminded China that it must reinforce its cyber security and act as a constructive role to guard peace across the Internet. As for the speculation that it was China that cut off North Korea's Internet connections, these are spurious and do not merit our attention.- Global Times

Thursday, 25 December 2014

KUALA LUMPUR: As Malaysians enjoy the year-end holidays spanning Christmas, the weekend and on to the new year, they can look forward to more such long weekends next year.

With 13 national holidays and 23 state holidays next year falling on either Thursday, Friday, Saturday, Sunday or Monday, there are easily seven “long weekends” if one plans for them.

January’s long stretch comes from Prophet Muhammad’s Birthday (Saturday, Jan 3) falling close to New Year’s Day (Thursday).

Chinese New Year (Thursday and Friday) will provide the extended break for February, while May’s rest from labour comes from Wesak Day (Sunday) coming two days after Labour Day (Friday).

Hari Raya Aidilfitri is expected to fall on the third Friday and Saturday of July, while National Day is on the last Monday of August.

Hari Raya Haji falls on a Thursday in September, while in states like Kedah, Kelantan, Perlis and Terengganu, Hari Raya Haji is observed for an additional consecutive day.

For states observing Sunday as rest day, November’s extended break could come from Deepavali, which falls on a Tuesday.

And the year ends with a second celebration of the Prophet Muhammad’s Birthday, which falls on Christmas Eve due to a shortened Muslim calendar next year.

Businesses are bracing for some impact on productivity as they anticipate employees will apply for additional leave to create their own extended breaks.

Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan stressed it was critical for companies to plan ahead for these long stretches in order to maintain output and productivity.

“Companies need to work together with their employees so there would not be any major losses,” he said.

Meanwhile, Small and Medium Enterprises (SME) Association of Malaysia national president Teh Kee Sin said there would usually be a productivity drop of between 20% and 30% during long holiday periods.The only thing we dread are holidays that are declared at the last minute as these do not provide us enough time to prepare. — Teh Kee Sin

“In fact, many SMEs limit the number of public holidays to no more than 14 days a year.

“According to labour laws, employees in the private sector are entitled to 10 public holidays, with Labour Day, the King’s birthday, the Sultan’s birthday (state holiday) and National Day being compulsory holidays,” he said.

“The only thing we dread are ‘holidays’ that are declared at the last minute as these do not provide us enough time to prepare,” he added.

With 14 national holidays covering 16 days, Malaysia is in the global top 10 in terms of number of public holidays, with one survey ranking us at seventh.

Malaysians already eyeing next year's holidays

PETALING JAYA: Even as they are vacationing, Malaysians are already planning for next year’s holidays.

Malaysian Association of Tour and Travel Agents (MATTA) vice-president of ground transportation Jayakumar S. Sinnadurai said companies have started making reservations with travel agencies for their corporate trips.

“We have received bookings for the weekends extended by celebrations such as, Wesak Day (Sunday) and Chinese New Year,” he said.

“Islands in the east coast of the peninsula like Pulau Tioman, Pulau Kapas and Pulau Perhentian are popular choices.”

National Tourism Council of Malaysia vice-president Jimmy Leong Wie Kong claimed that more companies are organising such trips as a form of incentive for employees.

“Long weekends are great as they do not restrict company trips to just nearby locations,” Leong said.

“Such incentive trips help in employer-employee bonding and are increasingly popular.

Wednesday, 24 December 2014

Information technology players believe Malaysia is beginning to tap into the potential of the Internet of things.

KUALA LUMPUR: Social media, the cloud and big data will be the game-changing trends that will transform Malaysia’s information and communications technology (ICT) industry and spur further growth of the Internet of Things (IoT) next year, says industry players.

National ICT Association of Malaysia (Pikom) chairman Cheah Kok Hoong said Malaysia had started to tap into the rapidly growing potential of IoT, which could be a new economy by itself covering business areas such as embedded device manufacturing, connectivity infrastructure and application deployments.

He said the trend would provide a new opportunity to position the country as the hub for regional IoT innovation projects in South-East Asia.

However, companies would be increasingly challenged by new factors on the back of business agility that came with mobility, security, analytics, and miniaturisation of devices and millennial generation aspirations, he told Bernama.

“Adoption of cloud solutions will also move from conceptual to the practical stage.

“As predicted by International Data Corp’s global market intelligence, Malaysia’s big data market is anticipated to hit not less than RM75mil but many businesses have yet to consider big data as a big business for their organisation and it thus remains at a tactical level,” he added.

IT spending registered significant growth as reflected in the growth of value-added services, which are expected to grow about 13.6% in 2014 to RM68bil from RM59.8bil in 2013.

Cheah said the overall ICT services sector was also projected to grow at 12.7% in 2015 to RM77.7bil.

Meanwhile, CA Technologies South Asia vice-president Chua I. Pin said the country was entering an era where IT had become the central source of revenue for businesses.

He said 2015 would see a shift in the way businesses structured themselves, looking for new engagement and revenue opportunities using connected devices, big data and analytics, and underpinning these new models would be a fundamental shift in the way software is developed and deployed.

“Software will continue to become the primary way that consumers interact with businesses, which would evolve dramatically in 2015 as businesses become more competitive to reach out to their clients, and we will see apps shifting from simply helping people make decisions to being able to predict what people need,” he said.

Cheah added that with the need for more sophistication in the ICT industry, human capital remained the main challenge in the industry towards achieving high-income nation status.

There is a persistent and widening gap of remuneration packages for ICT professionals between Malaysia and neighbouring countries such as Vietnam and Thailand, coupled with the declining number of ICT graduates, he said.

He said although the new trends such as big data and social media had created many new job functions in high demand, the nation still faced a lack of skilled talent in the market. — Bernama

Monday, 22 December 2014

It is not prudent to fund children’s education with your retirement fund

EDUCATION is the social game changer. In poor countries, it alleviates poverty. In developing nations like Malaysia, a more educated population can catapult us to developed status.

Scores of parents are striving hard to send their children to international schools to gain the holistic education, have better choices of tertiary institutions and have access to better paying jobs.

Borrowing future funds

Sending children to international schools is deemed the ticket out of mediocrity in Malaysia and to have a fighting chance in the global job market. But to what end?

Whether it is using EPF savings or selling off property to fund children’s private or international school education, this can be costly to many middle-class parents. While it may be acceptable to borrow funds to ensure our children get better secondary or tertiary education as they can always pay off the loans when they become employed, it is harder to replace “lost” retirement funds.

Therefore, it is not a prudent move to use funds meant for retirement as the fund is most needed when the “parents” are not at income-generating age any more.

Prioritising funds

With today’s Gen X-ers who are becoming parents at later age, we not only have to nurture our children but also care for our ageing parents whilst saving for our retirement. Prioritising investments is key.

1. Be realistic. Parents want the best for our children. If education savings are started early to take advantage of compounding effect, that’s great. If funds only permit an overseas tertiary education, then find the best local education option as our children can still experience holistic learning during university years abroad.

2. Gen Y-er parent, start investing now into a diversified portfolio. It is already too late if you have not started, as the cost of education will only increase.

3. Education is not just about getting the paper qualification. It is about learning. Parents can show kids new ways to learn without busting purses. Take advantage of free online courses like TedTalk or Khan Academy and “experiences” offered by museums, art galleries, nature trips and even playtime in the park.

Sunday, 21 December 2014

2014 has seen a tsunami of epic hacks and identity thefts, including the recent massive cyber attack on Sony Pictures Entertainment. Security experts are predicting more or worse cases of such hackings, including in Malaysia where the awareness of cyber threats and security measures is still very low

Brace for more cyber attacks

PETALING JAYA: If you think that a cyber attack like what happened to Sony Pictures Entertainment could only happen in Hollywood, think again.

It is a sign of what’s to come globally in 2015, say cyber security experts.

In the attack on Sony on Nov 24, the attackers hacked the company’s network and took terabytes of private data, deleted original copies from the company’s computers and left messages threatening to release the information if Sony did not comply with their demands.

Nigel Tan, director of systems engineering for software security firm Symantec Malaysia said the prominent data leaks of 2014 would keep cyber security in the spotlight in 2015.

“With the interconnected nature of a global Internet and cloud infrastructures, cross-border flow of data is unavoidable and needs to be appropriately addressed.

“Malaysia was affected in the data breaches this year and will continue to be affected next year,” he said.

Tan recalled a hack last month by a site called Insecam, which downloaded and displayed images from unsecured webcams of CCTV and simple IP cameras around the world, including from Babycams.

Symantec expects more mega data breaches next year, especially with the rising use of mobile devices for e-payment and the cloud computing technology for storage of personal and confidential information.

“Mobile devices will become even more attractive targets for cyber attackers in 2015 as mobile carriers and retail stores transition to mobile payments.

“Mobile devices are also used to store troves of personal and confidential information. They are left switched on all the time, making them the perfect targets for attackers,” said Tan.

He said the growing use of smart home automation, like smart televisions, home routers and connected car apps had also increased the potential of cyber attacks as more devices were being connected to the network.

Cyber law expert Dr Sonny Zulhuda agreed that the idea of synchronisation and interlinking of smart home automation (or the Internet of things) would be too tempting for both users and “abusers”.

“Users need to balance the use of these devices and smart technology with the efforts to preserve security, privacy or confidentiality.

“Just imagine how many mobile users are concerned about installing a good malware scanner on their devices. In the mind of the criminals, on the other hand, this will make their work even easier.”

Dr Sonny, who is assistant professor at the law faculty of the International Islamic University Malaysia, said it would come to a point where people would get too tired with the intrusion and abuse of their privacy.

“In Malaysia, for example, more people are being aware about the need to protect personal data thanks, to the enforcement of the PDPA 2010 (Personal Data Protection Act).

“Perhaps it is timely now to consider the development and penetration of cyber insurance as a new product for our insurance industries,” he said.

Imam Hoque, managing director of business analytics software and services company SAS said another reason why more cyber criminals target mobile devices was the increasing number of corporations embracing the “bring your own device” (BYOD) to work policy.

“This coupled with a general trend for business to provide more methods of interaction with consumers using mobile devices opens up further opportunities for hackers.

“The emergence of more mainstream malicious software kits for these mobile devices will accelerate the number of attacks on the mobile channel,” he said.

Hoque said that the continued trend to store data within the cloud, coupled with the high-publicised data losses from corporations such as Sony would encourage more hackers to consider large data loss exploitation.

“This in turn will lead to higher levels of identity theft and the ability of hackers to compromise the relationships between individuals and the institutions with which they interact,” he said.

CyberSecurity Malaysia CEO Dr Amirudin Abdul Wahab said while malware would continue to rise steadily on mobile devices to attack individuals, cyber criminals would also exploit the mobile device for advanced persistent threats (APT) on specific targets, resulting in high impacts on security, prosperity and public safety like critical infrastructure and big corporations.

“We foresee sophisticated APT carried out using a combination of technical sophistication, excellent planning and coordination, and social engineering,” he said, adding that another major cyber threat next year was the increasing influence of social media.

“Social media can be exploited to propagate political and racial radicalism as well as religious extremism that could destabilise our national security and societal harmony which we have taken for granted all these years.”

BY Hariati Azizan The Star/Asia News Network

Common hack job used to attack Sony Pictures

The entrance of Sony Pictures Studios in Culver City, California is seen December 16, 2014. "Guardians of Peace" hackers invoked the 9/11 attacks in their most chilling threat yet against Sony Pictures, warning the Hollywood studio not to release a film which has angered North Korea. - AFP

PETALING JAYA: The hack on Sony Pictures Entertainment might have been one of the most incredible cyber attacks ever, but it was carried out in one of the most common modus operandi of cyber crime.

As reported on Friday, US investigators had evidence that hackers stole “the keys to the entire building” of Sony Pictures by getting the password of a top-level information technology employee in the entertainment company.

Security experts in Malaysia have warned that we are also vulnerable to similar attacks with low level of awareness of cyber threats and security measures.

Cyber criminals exploit “users’ ignorance”, along with the rise of social media and mobile devices, to mount attacks against them,” said CyberSecurity Malaysia CEO Dr Amirudin Abdul Wahab.

He said more cyber criminals were using a combination of technical sophistication and social engineering - a non-technical method of intrusion that relies heavily on human interaction – to trick people into breaking normal security procedures and giving up their personal data.

Nigel Tan, director of systems engineering for Symantec Malaysia, cautioned that user behaviour will continue to be big target points for cyber crime next year.

“Sometimes the weakest link is the person behind the keyboard. If they visit dodgy websites, click on unknown links in fake emails and download apps or malicious software, cyber criminals will take advantage of this to siphon off information like passwords for online banking or e-mails.”

Tan said as most people still tend to use the same password for all their online transactions, services and websites, a stolen password can give the thief access to the victim’s whole life.

“And once they access your email, they can reset all your passwords and take over your identity,” he said.

Imam Hoque, managing director (Fraud and Security Solutions) with business analytics software firm SAS said the growing number of online services has created a goldmine for cyber criminals.

“If you think about how many different services you interact with over web and mobile channels, the numbers are forever growing.

“You need to consider what a hacker would need to know to compromise your accounts and then what damage they could do,” he said, stressing that hackers tend to go for the weakest link and then work their way from there.

Tan highlighted the case of a group of hackers in August who claimed to have stolen 1.2 billion usernames and passwords belonging to more than 500 million e-mail addresses in a hack described as the “largest data breach known to date”.

“They did it by targeting every site their victims visited, instead of focusing on one large company,” he said.

“While it is important to equip ourselves with some technical knowledge about the risks and threats to security, we also need to use our common sense when facing possible threats.

“One thing we need to understand with technology is the law of economy – why would people provide you mobile apps for free? Or any online service for that matter, for free?”

“How do they make profit if not from the access to users’ information that they acquire when you install such a free app? If one is keeping this in his mind, then he will be more mindful and careful in using the mobile devices.”

Dr Amirudin warned local computer experts not to be seduced by the seemingly easy but lucrative reward of cyber crime.

“Cyber crime is preferred by criminals due to its profitability, convenience and low risk, and their ‘success’ has boosted the global underground economy. It has even become a money-making profession for some computer experts.

“If this trend affects Malaysians, our own experts could be recruited to join the lucrative international underground economy, while our general public become their potential victims.”

PETALING
JAYA: Local websites have been hacked ahead of the deadline set by a foreign-based hacker group, Anonymous, that said it would attack the Malaysian Government portal at 3.30am today. On the micro-blogging ...

Saturday, 20 December 2014

Economic troubles ahead but most don’t think it will be as bad as back then

We don’t see a crisis brewing in emerging Asia. But that is not to say there aren’t risks. We believe those risks are going to be mitigated and managed. Despite some portfolio outflows, we believe there is still sufficient liquidity in the market for some trading ideas

The weakening ringgit has caused anxiety. But is the economy in a similar situation to Malaysia’s worst ever crisis 16 years ago?

MANY Malaysians will still remember the Asian financial crisis of 1997/98. Nearly 20 years ago, the then crisis was responsible for the greatest capital market crash in the country and forced many structural changes we see today in the financial markets.

It was a time of great turmoil, with people losing their investments on a scale never seen since. Companies for years bankrolled on easy credit were leveraged to the hilt and crumbled under the weight of their debts as business evaporated and the cost of credit soared.

Shares traded on the stock exchange mirrored the scale of the troubles. The benchmark stock market index plunged from a high of 1,271 points in February 1997 to 262 on Sept 1, 1998. Words such as tailspin and panic were common in the financial section of newspapers and the chatter among market players as people scrambled to take action.

“More people are talking about it with the fall in the ringgit,” says a fund manager who experienced the difficult times in the late 1990s.

Triggering the crisis back then was the fall in the regional currencies, starting with the Thai baht. Speculators then zeroed in on other countries in Asia and Russia as the waves of attack on the currencies back then saw many central banks spending vast amount of foreign exchange reserves to defend their currencies.

Exhausting their reserves, those central banks requested for credit help from the International Monetary Fund to replenish their coffers.

Attacks on the ringgit and many other currencies in Asia sent the ringgit into freefall as the currency capitulated from a previously overvalued zone against the US dollar.

The ringgit dived into uncharted territory to around RM4.20 to the dollar before capital controls were imposed and the ringgit was pegged at RM3.80 to the dollar. The ensuing troubles were seen from the capital market to the property sector. Corporate Malaysia was swimming in red ink and huge drops in profit.

The shock from that period was different than what the country had seen in previous recessions. The last economic recession prior to that was caused by a collapse in global commodity prices and during that pre-industrialisation period before factories mushroomed throughout the major centres of the country, unemployment soared. Unemployment was not a major issue in 1997/98 like it was in the prior recession but the crunch on company earnings meant wage cuts and employment freezes.

With the drop in crude oil and now with the resurgence of the US economy, the flight of money from the capital market has began.

Deja vu?

Most would argue that no two shocks or crisis are the same. There is always a trigger that is different from before. From the Asian financial crisis, the world has seen the collapse of the dotcom boom which crushed demand for IT products and services. Then there was the severe acute respiratory syndrome (SARS) crisis and the global financial crisis in 2008/09. There were periods of intermittent volatility in between those periods but there was nothing in Malaysia to suggest trouble ahead.

Shades of 1998 though have emerged in this latest wave of turmoil but the situation now is not the same as it was back then.

“We don’t see a crisis brewing in emerging Asia. But that is not to say there aren’t risks. We believe those risks are going to be mitigated and managed,” says World Bank country director for South-East Asia, Ulrich Zachau.

The fall in crude oil prices, which has been the trigger for Malaysia, has sent the currencies of oil-producing countries lower, affecting their revenues and budgets. In South-East Asia, pressure has been telling on the ringgit and the Indonesian rupiah.

Reminiscent of the gloom and doom of 1997/98, the Indonesian rupiah tanked against the dollar to levels last seen during that period.

Intervention by the Indonesian central bank addressed the decline, but the situation is also different today then it was back nearly two decades ago.

“Bank Negara is still mopping up liquidity today,” says another fund manager who started work in Malaysia in the early 1990s.

Although liquidity is plentiful in Malaysia, money has been coming out of the stock market. Foreign selling has been pronounced this year and the wave of selling has seen more money flow out of the stock market this year than what was put in to buy stocks last year.

Equities is just an aspect of it as the bigger worry is in Government bonds where foreigners hold more than 40% of issued government debt.

“The fear is capital flight and people are looking to lock in their gains,” says the fund manager.

“The worry will start when people get irrational.”

Times are different

While the selling that is taking place in the capital markets is a concern, Malaysia of today is vastly different than it was during the 1997/98 period.

For one, corporates in Malaysia are not as leveraged as they were back then. Corporate debt-to-gross domestic product (GDP) ratio is below 100% but it was above 130% in 1998. Furthermore, corporate profits are still steady although general expectations have been missed in the last earnings season.

Secondly, fund managers point out that the banking system is in far better health today, better capitalised and seeing the average loan-to-deposit ratio below 100%. That loan-to-deposit ratio was much higher than 100% during the 1997/98 period and and as loans turned bad, the banks got into trouble.

“Fundamentally, we are much stronger now. That was not the case back then,” says a corporate lawyer.

“The worry though is on perception and denials that there is no trouble.”

The one big worry, though, is household debt. That ratio to GDP is crawling towards the 90% level while it was not even an issue back in 1997/98.

Sensitivity analysis by Bank Negara which looks at several adverse scenarios, such as a 40% decline in the stock market and bad loans from corporates and households shooting up, indicate that the banking system can withstand a major shock.

“The scenario-based solvency stress test for the period 2014 to 2016 incorporated simultaneous shocks on revenue, funding, credit, market and insurance risk exposures, taking into account a series of tail-risk events and downside risks to the global economic outlook.

“The simulated spillovers on the domestic economy were used to assess the compounding year-on-year impact on income and operating expenses, balance sheet growth and capitalisation of financial institutions, disregarding any loss mitigation responses by financial institutions or policy intervention by the authorities,” says Bank Negara in its Financial Stability and Payment Systems Report.

“Even under the adverse scenario, the post-shock aggregate TCR (total capital ratio) and CET1 (common equity tier 1) capital ratio of the banking system were sustained at 10% and 7% respectively, remaining above the minimum regulatory requirement under Basel III based on the phase-in arrangements which are consistent with the global timeline,” it says in the report.

Government finances and the current account

The line in the sand for Government finances seems to be at the US$60 per barrel level for crude oil prices. A number of economists feel the Government will miss its fiscal target of a 3% deficit next year should the price of crude oil drop below that level.

With oil and gas being such a big component of the economy than what it was in 1997/98, the drop in the price of crude oil could also spell trouble for the current account and cause a deficit in the trade account.

Those concerns have been highlighted by local economists and yesterday, Fitch Ratings echoed that worry.

“Cheaper oil is positive for the terms of trade of most major Asian economies. But for Malaysia, which is the only net oil exporter among Fitch-rated emerging Asian sovereigns, the fall increases the risk of missing fiscal targets.

“The risk of a twin fiscal and external deficit, which could spark greater volatility in capital flows, has increased. Malaysia’s deep local capital markets have a downside in that they leave the country exposed to shifts in investor risk appetite. Malaysia’s foreign reserves dropped 6.8% between end-2013 and end-November 2014, the biggest decline in Fitch-rated emerging Asia,” it says in a statement yesterday.

Despite the softness in the property market and corporates getting worried about their profits, the general feeling is that Malaysia will not see a repeat of 1997/98. The drop in the ringgit and revenue for crude oil will mean a period of adjustment but the cheaper ringgit will make exports more competitive.

The difference between then and now

The ringgit vs the dollar ...

The ringgit’s steep decline against the dollar has made it one of the
worst performing currencies of late. That decline, although steep
and having caught the attention of the central bank, is more down to the
link with the decline in crude oil than structural issues to be
worried about.

Capital ratios of banks ...

Banks today are far better capitalised then they were during the 1997/98
crisis, which forced the local banking industry to consolidate for
their own good. Stress tests by the central bank suggests then
even under adverse conditions, banks in Malaysia wil be able to
withstand the shock associated with it.

Loans-to-deposit ratio ...

The ratio of loans against the deposit of banks have been rising but it
is no where at the level before the Asian financial crisis in 1997/98.
Banks too are aware of making sure it does not cross 100% and the
development of the bond market means leverage risk has been diversified
from the banking sector.

Businesses not as leveraged ...

One of the reasons corporate Malaysia was in trouble in 1997/98 was down
to its leverage, or debt levels. Today. corporates are not as geared as
they were back then and although that level is rising, their financial
position and better cash balances and generation means they are able to
better withstand a shock to the economy.

Household debt to GDP ...

This is the biggest worry. As households are leveraged despite the
financial assets backing it, that means any economic weakness or shock
will affect the ability to service loans taken to buy those assets. As
consumer demand has been a big driver to the economy, any changes the
affects the ability of consumers to continue spending will impact on
economy growth and have an impact on non-performing loans in the banking
sector.

Dropping current account surplus ...

The decline in the current account surplus means that the domestic
economy has been growing strongly. There were concerns earlier and the
prioritisation of projects was able to smoothen imports to ensure
a positive balance of trade. The drop in crude oil prices could mean a
deficit in the current account in the first quarter of next year but the
weaker ringgit should translate to better exports and a better current
account balance thereafter.

Friday, 19 December 2014

IT has been a good year for Honda Malaysia as its sales figures from January to November has steadily increased to 69,150 units

This is a 34% increase compared to the brand’s total sales of 51,550 units last year..

In fact, Honda Malaysia claims that it is now the market leader in the non-national passenger car market, taking away the title from UMW Toyota.

According to Akkbar Danial, general manager for Honda Malaysia and also the company’s head of marketing, Honda Malaysia is well on track to hit its 2014 target, which is 76,000 units.

“The tsunami and earthquake in 2011 disrupted our production and parts supply but we restructured our business operation and devised a threeyear plan to achieve a high volume sales in Malaysia,” says Akkbar.

He adds that the main strategy is to offer affordable products that give buyers value for money in order to be competitive in the Malaysian market.

“We achieved this by increasing the localisation of our parts and the result is the current City and Jazz, which both carry competitive prices with added features.”

The other approach was a re-look into its operations and as a result, Honda Malaysia has expanded its production with the new No.2 Line at its Pagoh plant in Malacca.

This has increased its production capacity from 50,000 units to 100,000 units a year.

In the same period, Honda Malaysia also looked into increasing efficiency in its factory and expanded its pre-delivery inspection process and parts warehousing.

“Finally, to accommodate the high volume of sales, we have also expanded our dealer network from 62 dealers in 2012 to 78 dealers this year. This is to ensure that our customers are more satisfied. We plan to have a dealer in all major towns in Malaysia,” explains Akkbar.

Currently, its best selling model is the City, which has sold 32,465 units from January to November this year. Honda has also introduced variants that cater to all budgets.

The Jazz for example, has three variants and prices start at RM72,800 and go up to RM87,800. The City has four variants and its prices start at RM75,800 with the highest variant priced at RM90,800.

Such a wide range of prices offer options to the consumers, which translate to more offerings and higher sales.

Honda Malaysia has 11 models in its list and this includes three hybrid models - the Civic Hybrid (RM185,500), CR-Z (RM183,000) and the Jazz Hybrid (RM89,912). The latter is assembled locally and enjoys the hybrid benefits introduced by the government.

Thursday, 18 December 2014

Once a cleaner at a grocery store, Koum's fortune changed the day he got the idea of an app that would allow people to send text messages via the Internet instead of sending SMS.

WhatsApp users worldwide received surprising news when Jan Koum, the founder of WhatsApp announced that Facebook was buying over WhatsApp for USD19 billion in cash and stock. It is by far the biggest acquisition made by the social networking giant to date. Prior to this, Facebook closed a deal with Instagram for USD1 billion in 2012.

WhatsApp Messenger is a successful cross-platform mobile messaging app that allows users to exchange messages without having to pay SMS bills. All it needs is an internet data plan. In addition to basic messaging WhatsApp users can also create groups, send each other unlimited images, video and audio media messages. WhatsApp currently has 600 million users worldwide.

Jan Koum, now a billionaire from the deal made with Facebook, was born in a small town outside Kiev, Ukraine. He was the only child of a housewife and construction manager and the family led an austere life. At the age of 16, he moved to Mountain View, California with his mother and grandmother. His father stayed behind with plans to follow on later.

To make ends meet every month, Koum worked as a cleaner at a grocery store and his mum worked as a babysitter. He even had to line up to collect food stamps during those tough times. His mother was diagnosed with cancer in 1997 and they lived off her disability allowance. It was in the same year that Koum’s father became ill and passed away. His mother too eventually succumbed to cancer and passed away in year 2000.

At the age of 18, Koum developed an interest toward computers. He taught himself computer programming by purchasing manuals from a used-book store and returning them after he was done. He then enrolled in San Jose State University and moonlighted for Ernst & Young as a security tester. After that he worked for search engine company, Yahoo! Inc.

Koum’s work involves inspecting Yahoo!’s advertising system, which led him to cross paths with Brian Acton (later co-founder of WhatsApp).

Over the next nine years, Koum and Acton were pulled in to help launch Yahoo!’s advertising platform. Koum recalled Acton’s words, “Dealing with ads is depressing. You don’t make anyone’s life better by making advertisements work better,” Koum was not happy with the situation as well.

In September 2007, Koum and Acton decided to resign from Yahoo!. After taking a one year break, Koum and Acton started looking for jobs. Both applied and got rejected by Facebook Inc. It was two years later in 2009 that Koum bought an iPhone and realised that the App Store would unlock future potentials. Koum had the idea of an app that would allow people to send text messages via the internet instead of sending SMSes. He named it WhatsApp that sounds like “What’s Up”.

It became an instant hit among iPhone users after the app was uploaded to the App Store. Koum insisted not to sell ads on the app after his bad experience dealing with ads at Yahoo! for years. WhatsApp was growing big worldwide and the founders decided to charge an annual rate of USD1 to its users. They were surprised to know that users are willing to pay to use the app.

WhatsApp gradually brought in USD5000 in revenue every month by 2010. Acton helped out Koum by investing USD250,000 in WhatsApp. As a result Acton was named co-founder of WhatsApp. By early 2011, the number of users are growing at an immense rate, and it is adding an additional million users everyday.

WhatsApp became one of the top 20 of all apps in the U.S App Store. Two years later, Sequoia invested another USD50 million. This resulted in WhatsApp being valued at USD1.5 billion.

In 2012, Koum received an email from Facebook founder Mark Zuckerberg. Zuckerberg was very interested at what Koum built and hinted to Koum at his interest in combining their two firms.

After two years, Koum and Acton signed and sealed the deal with Zuckerberg on the door of the welfare office where Koum used to collect food stamps.

Facebook bought WhatsApp for $19 billion in cash and stock in February 2014. Its by far the most lucrative engagement in tech history.

This deal seals Koum as tech’s new billionaire, pocketing USD6.8 billion after taxes. The agreement also appoints Koum as Facebook’s new board member - a rags-to-riches story that should inspire all nerds out there.

If
Facebook's move to buy the startup in a cash-and-stock deal valued as
high as US$19 billion (S$24 billion) is any indication, the
California-based WhatsApp may have hit the mark. The firm founded by
former Yahoo ..

Wednesday, 17 December 2014

ENTREPRENEURS are naturally protective of their ideas. Understandably, they keep their ideas to themselves to avoid having them stolen.

Don't keep it to yourself Tell your idea to as many people as possible and seek their opinions. Talk with people you trust and whose opinion you value.

While it is important to protect proprietary information from being copied, entrepreneurs can also gain valuable insight and perspective from feedback before investing heavily in a product that only looks good conceptually.

A startup’s journey is very much akin to running a series of experiments before it finds a path to sustainable growth. A product or an idea should be subjected to validation before it can be tweaked and scaled up to form a viable company.

And what better way to get some form of early validation than to share your ideas with like-minded people for constructive input.

While entrepreneurs are more willing to share and discuss their ideas these days, this culture of sharing is still new in the local scene.

Seasoned entrepreneurs have found bouncing ideas off other people to be more helpful than harmful. Apart from getting feedback on their ideas, they note that more often than not, sharing connects them with other people who can help fill the gaps and turn ideas into reality.

Additionally, sharing ideas and resources could also help accelerate innovation in a field.

For example, American electric car manufacturer Tesla Motors recently announced that it will be making its patents available to other companies that want to use them.

Elon
Musk, CEO of Tesla, unveils the dual engine chassis of the new Tesla 'D'
model at the Hawthorne Airport October 09, 2014 in Hawthorne,
California.

“Our true competition is not the small trickle of non-Tesla electric cars being produced, but rather the enormous flood of gasoline cars pouring out of the world’s factories every day,” Musk had said.

By allowing the use of its patents, industry observers note that Tesla will be clearing the way for more collaboration with other electric car makers to develop new technologies and would enable the company to take a leadership role in developing standards for the industry and its value chain.

Entrepreneurs are increasingly being encouraged to share and collaborate to innovate and build better products.

And a beauty about being in the present time is that there are more ways than ever to tap into a support network that can provide startups with a platform to share and build on ideas and resources.

Some of these platforms include spaces such as incubators, accelerators and co-working spaces. Apart from being just a shared working station, incubators, accelerators and co-working spaces have evolved into collaborative work spaces that provide entrepreneurs with the opportunity to meet and collaborate on ideas with a host of other people to innovate better solutions.

Additionally, there are various forums as well as startup events and programmes that provide a conducive environment for entrepreneurs to network, share ideas and work together. There are also a number of agencies that are targeted at guiding entrepreneurs with developing their ideas.

Most entrepreneurs still worry about letting on too much on their ideas. But if they can overcome that fear, entrepreneurs stand to gain much from collaborating with one another.

Take advantage of the entrepreneurial community brought together by such platforms to innovate and rather than develop your ideas in silos.

■ This is the final article in a 10-part tie-up between Metrobiz and the Malaysian Global Innovation & Creative Centre (MaGIC) to explore startup ecosystems.